InDinero’s Jessica Mah: This Is A 20-30 Year Company | Hacker News Reader

InDinero’s Jessica Mah: This Is A 20-30 Year Company

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73 pointsjlm38255 comments

It's interesting that Jessica didn't distinguish between revenue and income when she talked about the problem she ran into with the business she started. "We thought we had lots of revenue but it turned out our margins weren't that great." Revenue = money in. Income = Money in minus money out.

Revenue != Income.

It depends how you read it. She could have meant that they thought they were taking in a lot of money (revenue) but in reality they found they weren't keeping much of it (discovered their margins were thin, implying profits were lower than they expected because they just knew they were making lots of revenue).

I really need to stop using brackets so much.

Brackets are great (when used correctly).

Not understanding margins and/or cashflow is probably the number one reason why most small businesses go under. The book The Knack has an excellent explanation of this that I consider a must read:

http://www.amazon.com/Knack-Street-Smart-Entrepreneurs-Handl...

I think it's really cool that Web 2.0 entrepreneurs actually want to build businesses that have a clear business model, sell a product that people want, and have a clear path to long-term, sustainable profitability.

That said, I don't know how well this type of business correlates with raising such a large angel round- are all of those angel investors on board with that plan?

what they say in public doesn't always match what they say in private.(i.e. just take the whole demandmedia "we are super profitable...HONEST!")

in private, I'd bet that they are looking to build this up for 4-5 years, then sell it off to intuit.

I wouldn't immediately assume Intuit is automatically the most likely acquirer.

They seem the most likely....who else might be in the mix? A large progressive bank?

Inuit already bought Mint, why would they need inDinero? Mint has way more users, and already does the hard part - syncing with banks securely and categorizing expenses. Mint/Inuit could add a cash-flow module to their product and be done with it.

Depending on how Jessica decides to position it, I could see it exiting to a buyer like Freshbooks, where the combination product makes a suite of small-business finance tools. Like a mini-Microsoft Financal-Office (except in the cloud).

There is middle cases to where they build it up for 4-5 years and most of the investors cashout to a big player like intuit buying a sizeable chunk.

Seems strange to say that investors would be unhappy with having a clear business model, selling products people want, and having a clear path to long-term, sustainable profitability!

(Some) investors dislike the above when it comes at the expense of growth, and I think InDinero will be also focusing on growth.

If you're saying that investors would be unhappy that InDinero is not planning to flip in a couple years - if anything there are many more investors who dislike companies who seem designed around selling early instead of shooting for the moon (ie, an IPO).

Yeah, I was wondering if investors knew they were in it for the long haul when they were investing.

The secondary markets for great companies are very liquid -- it's not an issue today for investors.

I ask this question out of ignorance. An angel investment in a startup would seem to me like a very illiquid asset. Do they just go down to a cocktail party and sell away their "angel shares" or is there some sort of structured market for this sort of thing?

Not that I really know either, but I found this useful:

http://www.kalzumeus.com/2010/09/02/new-trends-in-startup-in...

“You owe me $20, with interest. Don’t worry about paying me back right now. Instead, next time you raise money or sell the company, we’re going to pretend that I’m either investing with the other guy or selling with you."

So if indinero takes more money, the early investors could sell their hypothetical convertible notes to the new investors.

Typically you would not be selling the convertible note: that second clause is for the case where you sell the company without taking additional outside investment, in which case the convertible note owner participates in that sale as if they had an equity interest.

Angel investments are generally illiquid, modulo "you invested in Facebook or some other company which is so hot there is a secondary market and a term sheet practically causes fusion of surrounding hydrogen atoms."

There is certainly a structured market (secondmarket) for this. Also, many angels are now selling their shares in later stage financing. So its certainly more liquid now than a few years ago.

There is a structured market, and most angels are allowed to sell into future rounds (in addition to being able to sell more generally, with minimal restrictions usually being a ROFO and No Competitors clause)

Jess being in for the long haul doesn't necessarily mean investors are in for the long haul. They can get bought out in subsequent rounds and there's always the option of an IPO. Intuit is itself a nearly 30 year company (1983) and I highly doubt the original investors are still around.

Do you have any evidence that investors want short-term returns?

This is a common misconception, and I'm not sure where it stems from. Investors would MUCH rather back Facebook than Mint, that is, investment dollars in a long-term success that becomes essential to the industry goes much further than a product that's acquired relatively early in the company's life.

What if they already had dozens of paying customers by the time they were raising capital?

If they're not, she's certainly put them on notice. Interesting.

She gripes about the A/R and A/P pains of a small business owner, but has never owned a SMB...I'm rooting for her, but hope she has added people to her team that really know this market.

Isn't this often the case? Startup founders seeing a market they don't understand completely, then talking to customers and working towards a good solution?

In fact, one of the problems today is that a lot of the best software is written for programmers/entrepreneurs or other markets which programmers know intimately. Writing software for markets that programmers don't know is done much less so (meaning there are tons of opportunities there).

Actually, she did own a small business[1]. She ran one from 12 until something like 15 (the source below gets the ages wrong), and one of her biggest problems was keeping track of the financial complexities, projecting cash-flows, etc.; out of that frustration has come InDinero.

[1] http://www.inc.com/magazine/20090301/university-of-californi...

Question is...

How long until FreshBooks partners with Yodlee, builds some reports and has a more complete solution?

Or... Intuit creates a version of Mint.com for small businesses? They have a lot more cash and overwhelming marketshare in the SMB market. They'd be able to do this in 5 years, not 20-30. I think this poses a huge threat to InDinero.

That being said, the product that Jessica has already built is quite impressive. But, if it takes 20-30 years to iterate towards solving all of the financial pain points of a small business, you'll be too late because Intuit has a huge head start.

You could have made the same arguments about Mint and Intuit. If it's so easy, why haven't they done it already?

For Intuit, this is close to the textbook example of the innovators dilemma. Intuit cannot do this easily because it will cannibalize their existing business. How would they introduce it?

They can't just add the features to their existing product, because the market for this product is different (business owners, not accountants).

They can't sell it as a separate add on, because that makes InDinero seem really good value for money.

They can't sell it for the same price or less than InDinero because it will eat profits from their existing products.

Good for her. Even if you are open to an acquisition, being ready to be 'in it for the long haul' puts you in a better position to negotiate - especially if there's only one really good potential acquirer out there. If you don't like their price you can always tell them 'see you next year', rather than becoming more desperate as the acquisition drags on.

I don't think they can afford to solve those problems in 20 years time. Somebody else will do it instead.

I was unimpressed by Jessica's failure to disclose that Eventbrite is a "paying customer" because its CEO is an investor.

I think the product has potential. I have worked on something similar for many years myself. I'll have a hard time rooting for its success, though, when Jessica seems to routinely make mistakes like this.

If Eventbrite actually uses it, it doesn't matter to me whether they heard about it from their CEO or not. In fact, lots of great businesses had their investors (or their friends) as first customers.

The point isn't whether or not relying on your investors' resources is a good way to get started in business. It is. It's just proper to be honest about it when asked.

If InDinero has so many paying customers ("hundreds" according to the interview), there should be no problem referring to one that isn't also controlled by an investor.

Who asked her that question? I didn't hear anything like that from the interviewer.

We, the internet, need a little more back up for your insinuation that she "routinely" makes these mistakes. Or that a mistake was even made in this case.

Also, there are famous people/businesses that use Dropcam, but I would never disclose them as customers because I don't have their explicit permission. Our friends and investors, however, are mostly happy to be named.

Full disclosure, I met Jessica for about 2 minutes at a Dropbox party once. Do you have anything to disclose?

Evelyn did. Fast forward 5:56 in.

I'm basing the word "routinely" on the Hacker News thread (which I'm sure someone can find) where Jessica admitted to copying another site's design wholesale. That's copyright infringement. She apologized for the mistake.

Everything I have to disclose is disclosed. If you'd like to try to poke holes in the TechCrunch interview I did with Evelyn a few weeks ago, feel free.

5:56: "So Eventbrite is one of your customers?" "They are one of our customers"

Truth value of this statement: 10/10. And it's a video interview, so you don't add caveats like "oh, and they heard about us because their CEO is an investor" to everything you say -- Eventbrite is just a representative of a customer archetype. If Evelyn had asked how Jessica got Eventbrite as a customer, it'd be a different story. But she didn't, making your comment misleading at best.

RE: web design, I side with http://news.ycombinator.com/item?id=989295. I remember when Scribd ripped off Xobni's jobs page almost verbatim, at Xobni we had a laugh and moved on. It's not like they duplicated the core product.

This really comes across as trollish nitpicking to me. What's your real beef?

In the context of the conversation it was pretty clear that many of the early customers already had some kind of relationship with them.

She'd already said how they had signed up early stage web startups at PG's suggestion, which implied a relationship there, and she'd said how many of the investors had ideas on how to use the product.

I see this as normal business. For example, in enterprise software it is not abnormal at all for customers to invest in a startup vendor company so they have some say in the business and some way of guaranteeing they remain around.

I disagree. Aside from the fact that not every web startup is affiliated with Paul Graham--mine isn't--I think the question was unambiguous.

"I'll have a hard time rooting for its success, though, when Jessica seems to routinely make mistakes like this" is both pompous and mean. She's 20, and seems to be doing a pretty good job all considered. If you really believe she's screwing up, perhaps you should email her directly.

Last time I did it was with a customer service issue with InDinero. No one replied, so I canceled my account.

Also, I started consulting at age 11 and incorporated at 15, so I think I have the right to call out young people in business when I feel like they could do better.

I made an InDinero account to kick the tires a bit, and made a few comments when closing the account. I received several emails from Jessica within 24 hours and an offer to discuss things on the phone.

Maybe she has increased her attentiveness since you canceled. Maybe she is only attentive to people who are closing accounts. However it came about, I was impressed with her responsiveness to my comments.

I think its a little hypocritical that her youth seems to be the primary reason she's notable, but can also be used to defend her actions when she screws up.

Yeah in the business world it doesn't matter how old you are, all the same rules apply. I think it's great that younger entrepreneurial types are creating things of real value, but we are in the real world with real customers spending real money.

Are you confusing cause and effect? Perhaps the CEO is an investor precisely because Eventbrite is a paying customer?

I'm pretty sure I'm not, but even if I were, the disclosure would still be appropriate.

I give the CEO of EventBrite enough credit to really try out the products of his portfolio companies before he invests.

A while back I was in an early-stage situation in which I was arguing for using quickbooks so as to at least have some semblance of double entry accounting (at least while we got our venture started). Another team member insisted on implementing our own solution... in excel. There is a market for this! Unfortunately, many small business-types just make-do, with paper if they have to, so it may be difficult for InDinero.

I'm totally not in the market for InDinero but I've seent his happen on multiple sites before. How do people agree to give the credential info of their bank account ?

I can't imagine giving out a login/password that is not restricted to just viewing my banking info. It seems to me that they are asking for full access to your bank account just to retrieve your data.

As Facebook-privacy scary as that sounds, many accounting start ups ask for this information. Xero, inDinero, Less Accounting, and Mint all do.

Is anybody here using indinero? How does it compare to quickbooks?

It's nothing like quickbooks. It's literally like the main tab of mint.com, it shows your current balance and you can drill down into transactions. If you want a proper quickbooks-like experience, I recommend xero.com which is, unlike indinero, actually useful for a small business.

Hmm.. Don't use either but I don't see how indinero (which I just looked at) is useful at all. Say goodbye to accounting? With this? Really?

Just use a spreadsheet if that's all you need..

She is fearless!

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